Hill Democrats blame W.H.

Congressional Democrats took aim at the Obama administration Wednesday, blaming the president’s economic team for creating a loophole that allowed AIG to pay its employees millions of dollars in bonuses and then not doing enough to stop the bonuses when it could.

And their warp-speed effort to get the money back made it clear that congressional Democrats don’t think the White House is moving fast enough to solve the problem now.

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In an interview with CNN Wednesday evening, Senate Banking Committee Chairman Chris Dodd (D-Conn.) said that “staff-level people” at the Treasury Department pushed him to add what seemed like “innocent modifications” to an amendment he offered to the stimulus bill — and that language, in turn, made it possible for the bailed-out insurance giant to pay its employees more than $100 million in bonuses last week.

“The public confidence in our ability is being adversely affected — not just mildly, but seriously,” Dodd said.

He wasn’t the only Democrat expressing displeasure with the Obama team.

“I think the administration at best is sending mixed messages,” said Sen. Ron Wyden, whose own amendment to crack down on excessive compensation was dropped from the stimulus bill. The Oregon Democrat credited President Barack Obama for being “very blunt and very forthright and very strong” on the issue, but he said the president’s economic team “has not followed up, and it’s not acceptable to the American people.”

Across the Capitol, Wyden got a strong second from House Ways and Means Committee Chairman Charles B. Rangel (D-N.Y.). As House Democratic leaders announced their support Wednesday evening for legislation that would recoup the money paid in bonuses by taxing them into nonexistence, a reporter asked Rangel how much input the White House had had in crafting the bill. Rangel said he’d kept White House officials abreast of what House Democrats were doing but that “they never made any suggestions at all.”

Rangel, not without problems of his own, joined other congressional Democrats in racing to find higher ground.

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Two days after the bonus news broke Saturday night, at least one bill to tax the offending bonuses into nonexistence had been introduced in the House. By Wednesday evening, House Democratic leaders had a bill drafted and ready for a vote Thursday morning that would place a 90 percent tax on bonuses given by firms that have gotten more than $5 billion in federal funds.

Congress overflowed with outrage Wednesday. At least two GOP House members called for the head of Treasury Secretary Timothy Geithner, even as White House chief of staff Rahm Emanuel declared that his job was safe.

While Obama decried the culture of “extreme greed” in remarks delivered Wednesday, he did not call for the bonuses to be recouped. Instead, his Treasury Department sent a letter to congressional leadership announcing plans to dock $165 million in bonuses from the latest $30 billion government infusion into the company.